October Added More Jobs Than Expected, But Are They Good Jobs?

From NPR News this is ALL THINGS CONSIDERED. I'm Melissa Block in Washington.

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And I'm Audie Cornish at NPR West in Culver City, California. This morning many economists were bracing for disappointing numbers from the Labor Department. But in fact, October hiring beat the estimates. Businesses seemed to shrug off last month's government shutdown, although the unemployment rate did tick up slightly to 7.3 percent. NPR's Yuki Noguchi explains.

YUKI NOGUCHI, BYLINE: Last month was no ordinary month. There was a 16-day government shutdown and a debt ceiling debate that took the country to the brink of default. And everyone, certainly Mark Hamrick, Washington bureau chief of Bankrate.com assumed that would have a negative impact on employment. But, in fact, business hiring turned out to be nearly twice what was projected.

MARK HAMRICK: My jaw could've hit the floor if it were capable of doing so.

NOGUCHI: The manufacturing, health care and professional service sectors all added jobs. But the biggest employment gains were in leisure and hospitality and retail. And Hamrick notes, those aren't high-paying, high-quality jobs. So while the top-line numbers look good, below the surface there are factors keeping wage growth low.

HAMRICK: And this has been a question for many months now, the quality of jobs creation. And once again it raises its head in this report.

NOGUCHI: The report suggests that, at least this month, the shutdown did not have a big impact, though it had some. It disrupted the collection of data and caused a delay in its reporting. And Labor Department Secretary Thomas Perez notes it also caused temporary unemployment to spike, and therefore for the overall unemployment rate to increase slightly. Plus it affected businesses and workers in ways not counted by these surveys.

SECRETARY THOMAS PEREZ: If you were a bed and breakfast owner near Yosemite, your business dried up. If you are a waiter here in Washington, D.C., your tips went down dramatically.

NOGUCHI: One big question raised by the report is, what happened to the size of the labor force? The percentage of people working or looking for work fell to its lowest level since 1978, has a huge number: 720,000 people dropped out. The Bureau of Labor Statistics said the decline had little to do with furloughed workers who were still counted as in the workforce. So then the question is, how much of this is due to demographics, aging baby boomers dropping out because they've reached retirement age, and how much is the result of people leaving because they've given up on the idea of finding a job? Perez says it's a tough question.

PEREZ: We're still trying to understand that and I think labor economists are still taking a very careful look at that.

NOGUCHI: And he says, it will take some time to get the discouraged workers back to work.

PEREZ: The way to provide encouragement is to grow the economy through the investments that the president is trying to do. That is by far the best way to get people back into the labor force.

NOGUCHI: Perez says, one big issue for hiring is the fiscal battles in Washington that shake business and consumer confidence. But, he says, the economy soldiers on.

PEREZ: Most employment reports show that the economy continues to be resilient. Notwithstanding the self-inflected wounds from Congress we now see 44 consecutive months of private sector job growth.

NOGUCHI: The hiring levels in October exceeded what's been happening for the last year, during which average monthly job gains have been 190,000. But the pace has been disappointing. Four years into the recovery the U.S. economy still has fewer jobs than it did before the recession. Janette Marx is senior vice president of ADDECO, a staffing agency. She says, hiring has been steady but last month's budget battles in Washington inspired some clients to have internal debates of their own.

JANETTE MARX: Should they hire, should they not, should they wait until 2014? You know, do they go forward in the fourth quarter, you know, with their hiring strategies as they're looking at their budgeting and planning across the board?

NOGUCHI: Adding to that speculation is whether the better-than-expected results in October will spur the Federal Reserve to pull back on its bond-buying stimulus program, a move that could raise interest rates. Yuki Noguchi, NPR News, Washington. Transcript provided by NPR, Copyright NPR.